DA, Reserve Bank in row over report

Johannesburg - The SA Reserve Bank and the Democratic Alliance are gearing up for a legal battle over what the Bank says is the opposition party's misuse of its name for electioneering.

Despite being asked to stop using the Bank's name in February, and even though the party said at the time that it would comply, the DA continues to run radio adverts claiming that the Reserve Bank says the party's economic plan would lead to 8 percent growth and create 6 million jobs.

In a lawyer’s letter the party sent to the Bank this week, the DA said it would not stop making statements “related to the work of the bank”.

"To the extent that you intend to persist with your demand, our client refuses to cease making true statements related to the work of the Bank, and in particular true statements concerning the Working Paper published in July 2013, and the similarity between its model and the DA's policies. Our client denies that there is any legal basis for you to make such a demand."

Independent Newspapers understands that this was in response to a Reserve Bank letter demanding the party stop claiming Bank endorsement for its economic policy platform, and accusing the DA of “political opportunism”, the strongest rebuke yet of the party's radio ads and media statements made by party leader Helen Zille.

The Bank's rebuke of the party relates to the DA’s use of a working paper authored by consultants to the bank, David Faulkner, Christopher Loewald and Konstantin Makrelov, titled “Achieving Higher Growth and Employment: Policy Options for South Africa”.

Produced last year, it painted several scenarios which could theoretically lead to higher growth and employment – which the DA claims “overlap” its exact policies which would equivocally lead to 8 percent economic growth and six million jobs.

But respected economists, including a senior economist at the Reserve Bank, have rubbished the paper – and the DA’s claims – saying 8 percent growth and six million jobs were patently out of reach.

“It’s quite disingenuous. It was a good (paper) but even if all the recommendations were implemented – with regard to education, labour market reform and so on – you still wouldn’t get 8 percent growth and six million jobs,” he said.

But the DA disagrees.

“The Reserve Bank paper shows that 8 percent growth and 6 million jobs are possible with the right policy interventions,” DA spokesman Gavin Davis said on Saturday.

“Given the overlap in the Reserve Bank paper’s proposed interventions with the DA’s policies, it follows that 8 percent growth and 6 million jobs would be achievable if the DA’s economic policy proposals were implemented. This is what we are conveying in our advertisement.”

The advert referred to is being aired on Gauteng radio stations including SABC’s MetroFM and commercial station, KayaFM.

It says verbatim: “It’s clear that our country needs jobs. More jobs means less crime and a better life for everyone. The DA will carry out a plan that the Reserve Bank says will create six million real, permanent jobs.”

In an ironic twist, the DA last week took Independent Newspapers to the Press Ombudsman for a report it published pointing to the existence of the advert despite the Bank's objections. In a letter to Independent Newspapers demanding a retraction of our original story, the DA contends that the party and and Zille have “never claimed that the Reserve Bank has endorsed DA policy”.

But this emphatic denial is at odds with both the DA lawyers' letter to the Bank, and with Zille's previous statements. In their letter to the Bank, Minde, Schapiro and Smith, the party's law firm, writes: "The policy interventions relied on in the Working Paper are virtually identical to those contained in the DA's economic policy. It was as a result of this this Working Paper that the DA earlier claimed that the Bank endorsed its economic policy."

This admission is in fact milder than the claim made by Zille in February. Zille told TV station eNCA, that “the Reserve Bank has modelled the DA’s policy and has concluded that indeed we can achieve 8 percent growth”.

On Saturday Davis said: “When Helen Zille said that the Reserve Bank had modelled our policy back in February, she was referring to a Reserve Bank paper which had essentially the same elements as our policy.”

The DA's lawyers’ letter says the party denies that there is any legal basis to accuse it of “political opportunism” and goes further, counter-accusing the bank and governor, Gill Marcus.

“If you intend to persist with attempts to prevent the public from hearing those true facts, it is you, not the DA who will show ‘scant regard for the Constitution or the independence and integrity of the Bank’,” the letter says, finally.

Davis said there was “nothing wrong with citing an independent source” – the working paper authored by consultants used by the Reserve Bank – as evidence for its election campaign claims on jobs and the economy.

“Political parties routinely use StatsSA and Census data, for example, to back up their claims. It does not mean that those independent agencies endorse that party or their policies, and it is not interpreted by the public as an endorsement,” he said.

“We acknowledge that the Reserve Bank has neither formally endorsed DA policy, nor has the Reserve Bank carried out a modelling exercise of DA policy.”

But that is not what the DA has said in its adverts or public statements, including in recent rallies.

Reserve Bank spokesman, Hlengani Mathebula this week said the DA and Zille had demonstrated disregard of the independence and integrity of the bank which acted in the interest of all South Africans.

“(The Reserve Bank) refutes the claim by DA leader Helen Zille, that the SARB has modelled the DA’s economic plan and confirmed its eight per cent growth projections,” he said.

“A discussion paper on the SARB’s website examines areas of policy reform, which if implemented, could contribute to achieving eight percent growth. The paper makes no reference to the DA policies or its manifesto.”

He said the bank’s research department frequently posted such papers on its website.

“These are independent papers, which are peer reviewed and intended to foster thinking on various policy issues.”

He said previously both Zille and the DA’s spokesman on finance, Tim Harris, had given him their personal guarantees that the party would stop saying the bank had endorsed the party’s policies in any formulation.

He said the paper was not an official paper and had no standing whatsoever.

As a result, the DA’s adverts and any comments to this effect were “misleading and not correct”, Mathebula said.

“We take exception to the continued disregard for the independence of the bank and the continued association between of the bank with party political policies,” he said.

“The Reserve Bank’s independence is guaranteed by the Constitution. The (bank) has never modelled any policy.”

Davis rejected this.

“We don’t believe it is false advertising because it is true that a plan similar to the DA’s, published by the Reserve Bank and modelled by Reserve Bank consultants (one of whom is a Reserve Bank employee), found that it is possible to create six million jobs,” he said.